Page 22 - CityofSouthlakeFY27Budget

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as streets, drainage, facilities, and technology; and the equipment, vehicles, utilities, and core support
systems that keep the organization running. Personnel continues to be the largest single driver. This year
also brought a notable increase in electricity costs with a 53% rate increase following the renewal of the
City’s electricity contract, which had been rate-locked for the prior ten years. After accounting for these
pressures, total expenditure growth demands were estimated at about 5%.

The pressures described so far reflect the continued cost of existing operations. FY 2027 also brought a
distinct, new cost as the City’s Municipal Service Center and Public Safety Training Tower come online.
Bringing the facility into operation required over $167,000 in new funding, slightly more than half of it
carried by the utility fund; the balance falls to the General Fund, most of it for the training tower. The
City absorbed that General Fund cost within the managed growth, funding new capacity through the
Budget Overview
same discipline it applies to existing operations.

Additionally, the City has had a longstanding practice of evaluating our organic budget growth, or our
cost of existing goods and services, against the growth of the Consumer Price Index (CPI) for the Dallas
/ Fort Worth Area. As a “cost-of-doing-business” benchmark, the CPI guideline is calculated from the
trailing 12-month average and adjusted for local spending patterns. For FY 2027, this methodology
resulted in a 2.5% guideline, well below the projected 5% expenditure growth demands. Evaluation of our
cost drivers across expenditure categories of personnel, operations and capital, revealed that projected
growth above the benchmark was largely reflective of the City’s market-leadership pay philosophy
(targeting the 85th percentile for public safety and the 70th percentile for general government) which
by design, outpaces the market and cost-of-living factors used in CPI calculations.

Understanding cost drivers is important but managing their impact requires several operational strategies.
To bridge the gap between the projected cost pressures and CPI guidelines, the City employs a suite of
operational strategies:

Budget Optimization. Before funding proposals reached the City Manager, each department completed
a structured self-evaluation to verify alignment with strategic objectives, eliminate duplication, and
redirect under-utilized dollars to higher priorities. Proposals then moved through two peer-review
stages: Deputy Directors assessed the quality and rigor of each submission, and Directors judged the
relative urgency and strategic value of competing needs. This collaborative process ensures that only
the most impactful and well-justified investments advance for final consideration. This year, the process
surfaced meaningful savings and reallocations, including more than $700,000 that was reduced from
existing budgets across all funds. Just as important, the discipline of the process created room to
absorb priority needs within the base budget rather than through new requests, funding items such as
our electricity costs increase without increasing the burden on the taxpayer.

Vacancy & Workforce Optimization. Personnel costs are the City’s largest expense, making thoughtful
workforce management essential. Whenever a position becomes vacant, we conduct a rigorous review
to confirm that the role still aligns with current priorities and service demands. When appropriate, duties
are redistributed, roles are redefined, or positions are temporarily held open. This approach enables
responsible resource stewardship, maintaining competitive compensation and high service quality
while operating within our existing staffing levels. Since FY 2024, this process has reduced the City’s
workforce by 10.5 positions, a decrease of 2.3%. FY 2027 will mark the third consecutive year of net
workforce reduction. Additional detail on the City’s compensation philosophy and workforce planning is
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